FESCO reports 280% increase in first quarter net profit

August 12, 2022

Future Energy Source Company Limited (FESCO) recorded a 238% increase in revenue to $6.46 billion from $1.91 billion reported for the corresponding period in 2021. The Company noted, ” Several factors affect revenue/turnover with the supply price of fuel being a major component. On average, this quarters refinery prices have increased 41.67% – 57.10% or J$60.38 – J$77.10 per litre relative to First Quarter (Q1) ended June 30, 2021.”

Cost of sales for the first quarter ended June 30, 2022 also rose by 236% to close at $6.24 billion (2021: $1.85 billion), leading to a gross profit of $216.08 million (2021: $54.86 million), up 294% year over year.

Operating and Administrative expenses amounted to $65.05 million, a 217% increase relative to $20.52 million reported in 2021.

Despite the uptick, FESCO reported operating profit of $151.03 million for the first quarter ended June 30, 2022, compared to $34.34 million documented for the comparable period in 2021.

Finance income for the three months ended June 30, 2022 declined by 86% to close at $759,567 versus the $5.60 million booked for the previous corresponding quarter.

Consequently, FESCO recorded profit before tax of $151.79 million relative to pre-tax profit of $39.94 million for the same period last first quarter.

FESCO incurred no tax for the quarter ended June 2022 (2021: nil) resulting in net profit of $151.79 million versus the $39.94 million booked twelve months earlier.

The earnings per share (EPS) for the first quarter ended June 30, 2022 amounted to $0.061 compared to earnings per share (EPS) of $0.016 reported in 2021. The number of shares used in our calculations is 2,500,000,000 units. The twelve months trailing EPS was $0.146. FESCO stock last traded on August 12, 2022, at $5.30 with a corresponding P/E ratio of 36.25 times.

Management noted, “The Company’s current ratio stands at 1.26 (June 2022) down from 2.60 at March 31, 2022. This is reduction reflects the Company’s capital expenditure (CAPEX) initiative to expand its fuel distribution network and acquisition of LPG assets. The Company has, subsequent to the June 30, 2022, restructured a significant portion of its short term debt to long term debt, the result of which will further improve its current ratio. As at June 30, 2022, the Company’s Debt to Equity (D/E) (long term-static) is 0.99 versus 1.31 from March 2022.”


Balance Sheet at a glance:

FESCO, as at June 30, 2022, recorded ‘Total Assets’ of $3.13 billion (2021: $918.31 million), a 240% increase year over year. The increase was attributed mainly to a 303% and 220% increase in ‘Property, Plant and Equipment’ and ‘Cash and cash equivalents’ which closed at $1.49 billion (2021: $369.96 million) and $903.25 million (2021: $282.15 million), respectively.

Shareholders’ equity totalled $922.38 million (2021: $581.69 million), resulting in a book value per share of $0.37 (2021: $0.23).


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